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Boeing talks not considering change of control at Embraer: paper

SAO PAULO (Reuters) - Tie-up talks between Boeing Co (BA.N) and Embraer SA (EMBR3.SA) do not contemplate a change of control at the Brazilian planemaker and are focused on joint ventures and joint business agreements, a Brazilian newspaper reported on Tuesday.

Citing sources familiar with the talks, Valor Econômico said the companies were looking at forming joint business agreements in which they divide costs and income in certain areas, or JVs, in which both companies enter independently into a partnership.

Among the areas Boeing was looking to focus on, the paper said, was complementing its aircraft portfolio, expanding sales platforms, and developing new products.

Such an arrangement would likely ease regulatory pressure surrounding the deal, as Brazil’s government has repeatedly said it is opposed to Boeing gaining control over Embraer due to the planemaker’s key role in Brazil’s defense sector. However, it may point to limits to the ambitions of a potential tie-up.

On Dec. 21, the two planemakers said they were discussing a “potential combination,” in a move that could consolidate a global passenger jet duopoly.

The talks are widely seen as a way for Boeing to strengthen its position in the regional jetliner market, in which Embraer is strong, thanks largely to its 70- to 130-seat E-Jets.

Less than three months ago, Boeing’s European arch-rival Airbus SE (AIR.PA) agreed to buy a majority stake in Bombardier Inc’s (BBDb.TO) 100- to 130-seat CSeries jet, putting pressure on the U.S. planemaker to seek a similar partnership.

The Boeing-Embraer talks involve Embraer’s defense business, as well as its passenger business, sources have said.

In the Tuesday report, Valor said Boeing was confident it could convince Brazil’s government that it could safely operate in Brazil’s defense sector, partially by pointing to defense deals the U.S. planemaker has made in countries such as Australia.